Ottawa agrees to put up funds for beleaguered Huron Central

The Canadian federal
government has said it will fund its share of infrastructure improvements
needed for Huron Central Rail if the Province of Ontario signs a Canada-Ontario
Provincial-Territorial Base Fund Agreement, The Sault Star reports.

A letter penned by John
Baird, the federal Minister of Transport, Infrastructure and Communities, says
the Infrastructure Stimulus Fund is no longer able to make new commitments, but
the federal government will support the shortline rail project if an agreement,
under negotiation with the province since 2008, is signed. The agreement would
free up C$175 million of infrastructure dollars to the province and must be
matched by the Ontario government dollar for dollar.

Ontario is the only
province that has not signed an agreement with the federal government for its
share of the money.

The
Provincial-Territorial Base Fund was established to provide each province and territory
with predictable federal funding of C$25 million per year over seven years. Under
the plan, each province submits an annual capital plan with a list of
initiatives for federal cost sharing and each contributes 50 percent of the
eligible costs.

Last week, the Sault and
area working committee, whose task it is to try to save the rail line and get
various agreements in place, said the higher levels of government need to fund
the project within four to six weeks or the rail line will cease to exist by
the end of summer. Time is of the essence so that materials can be ordered and
the infrastructure improvements can begin, Fratesi said.

While the city had
originally submitted two funding applications -- one under the Infrastructure
Stimulus Fund for C$12.1 million and one under the Build Canada Major
Communities Fund for C$33 million (or less what was received under the ISF),
Fratesi said stakeholders don't care where the money comes from as long as both
governments are involved.

Sault MPP David Orazietti
said the province remains committed to funding the necessary infrastructure
improvements to the rail line between Sault Ste. Marie and Sudbury. Orazietti
said the funding application has been filed through an application to the Build
Canada Major Communities Fund. He said, ultimately, it would be Ontario's
Ministry of Energy and Infrastructure Brad Duguid's decision where the
province's share of the funding will come from.

"We remain committed
to making an investment to Huron Central Rail line so that businesses and communities
that rely on the line can do so for many years to come," Orazietti said.

He said he's pleased the
federal government is also willing to fund the project.

"We need to move as
quickly as possible," to get that funding, Orazietti said. He said the
province is reviewing the Provincial-Territorial Base Fund Agreement to ensure
the province's interests are protected.

"From what I see
here, we have a few options on the table where the funding can come from and
I'm optimistic that (the province and the federal government) can reach an agreement
in the necessary timeframe," Orazietti said.

Sault MP Tony Martin said
he was pleased to see the federal government's commitment to the project,
although he had been told earlier that it was already there.

"We will continue to
monitor this and write more letters to the federal government urging them to
sign an agreement quickly to get these funds rolling and the material that
Huron Central Rail needs to complete the improvements ordered," Martin
said.

One outstanding issue is
the need for a business plan by Huron Central Rail. Fratesi said the plan is
currently being put together and won't be a factor in completing a deal.

Mayor John Rowswell noted
that the urgency isn't just to save the rail line but the region's economy. "Without
the railroad the potential growth or the stabilization of the region won't
occur," he said.

Last year, Huron Central
Rail announced that it would stop running the line between the Sault and
Sudbury, citing the need for major infrastructure improvements in order to
return to profitability. A one-year operational agreement was struck with Huron
Central, which expires in August if infrastructure funding doesn't come through
to allow the Montreal-based company to continue its operations.

The funding, and an
agreement with CP Railway, which leases the track, will see Huron Central
continue the operations for the long term. The framework for the agreement was
developed between the stakeholders, including communities along the route, shippers
and the operator.

Huron Central, which has
leased the rail line for more than a decade since 1997, has said it has lost
money over the past four years, including C$2.1 million in 2008. FedNor and
NOHFC injected an immediate C$3 million for track improvement and stakeholders
provided freight volume guarantees to keep Huron Central on line for a year
while a long-term solution is negotiated.